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Starbucks To Use Square Payment Platform In The US Stores

Now customers can pay for their cappuccino just by saying their name at the checkout

On by Max Smolaks 1

Starbucks has announced that starting this autumn, it will introduce the Square electronic payment service in its US coffee shops.

The partnership will allow customers to use the Pay with Square smartphone app in 7000 participating stores and pay for their latte by simply saying their name at the register. Square will also process all of the coffee retailer’s credit and debit card transactions in the US.

In return, Starbucks will invest $25 million (£16 million) in the start-up as part of its Series D financing round.

Say my name

Square, founded in 2010 by Jack Dorsey, the man who created Twitter, and his friend Jim McKelvey, is a payment platform that was among the first to allow users to process credit card transactions on their smartphones.

The Pay with Square app is available for free from the App Store and the Google Play Store. It enables customers to keep a tab with their favourite businesses and pay by simply stating their name. At the checkout, customer’s information and photo appears on the register and once they are verified by a member of staff, the transaction is complete.

Square started its business by providing free square-shaped credit card readers to its users and charging a 2.75 percent fee of on every credit card transaction. Although this rate was higher than the rate asked by conventional credit card processors, Square claimed that due to the absence of hidden charges, the fees were, on average, lower.

“As the largest retail mobile payment platform in the US, we’re excited and proud to accept payments with Square,” said Howard Schultz, Starbucks chairman and CEO. “The evolving social and digital media platforms and highly innovative and relevant payment capabilities are causing seismic changes in consumer behaviour and creating equally disruptive opportunities for business.”

“Both Starbucks and Square take a similar approach when building products and running our businesses, and together we can bring the best possible payment experience to Starbucks customers,” he added. As part of the deal, Schultz will join Square’s board of directors.

“We’re proud that Starbucks chose Square, as we share the value of always putting customers first,” commented co-founder Dorsey. “More than 2 million individuals and businesses can already use Square. This partnership will accelerate our ability to provide them with the tools they need to grow their business and thrive in today’s economy.”

Having obtained a stake in Square, Starbucks will promote the payment platform as the perfect tool for small businesses that could not accept credit or debit cards before, because of the high processing fees and complexity of the card-reading systems.

“As an entrepreneur, I understand how critical it is for new businesses to have easy and affordable access to card processing while also giving customers a choice in how they pay,” concluded Schultz.

Earlier this year, PayPal, one of the biggest players in the payment processing business, had launched its own, triangular card-reading device called PayPal Here. Soon after, it bought card.io, which developed an app that can read credit card details with a smartphone camera.

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Max Smolaks
Author: Max Smolaks
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Last comment

One reply to Starbucks To Use Square Payment Platform In The US Stores

  • On August 9, 2012 at 7:43 am by Sara Parker

    In its quest for small business clients who do not currently accept credit cards, Square typically touts its flat 2.75 percent per transaction fee as a simple alternative to the various fees some payment processors charge. This is awesome.

    - Sara

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